The USD is flat, oil prices are stable, equity markets are up, and US yields rise as US-Iran peace efforts hold. The U.S. dollar holds steady in early trading as investors assess progress in U.S.-Iran peace talks and thinner trading volumes ahead of the Independence Day holiday. Softer recent U.S. economic data has tempered expectations for near-term Federal Reserve rate hikes, though the greenback remains supported by resilient economic fundamentals and a still-cautious outlook on inflation. Global equities climb as softer U.S. jobs data cools expectations for an imminent Federal Reserve rate hike. Europe’s STOXX 600 touched a record high, while U.S. futures remain firmer, and Asian markets were supported by stronger regional activity data and a rebound in chipmaker stocks. Elsewhere, oil prices remain under pressure near four-month lows as progress in U.S.-Iran peace talks and the resumption of tanker traffic through the Strait of Hormuz continue to improve the supply outlook. Gold prices edge higher on softer U.S. rate expectations, while Bitcoin extends its recent rebound as investor risk appetite improves. We expect to be relatively thin with the US holiday, but markets will monitor speeches by the BoE's Bailey and the ECB's Nagel for direction.
News Headlines. Anthropic moves to close loopholes that allow Chinese access to Claude. Canada unveils plans for new oil pipeline to break dependence on the US. China steps up claims in the East China Sea east of Taiwan. Hormuz transits increase as US-Iran ceasefire holds. The US economy undershot forecasts, adding 57,000 jobs in June. NATO leaders to gather in Ankara, aiming to smooth over tensions with Trump. Iran warns US and Israel against attacks ahead of funeral processions for Khamenei. The ECB is in 'good position' after June rate hike, Moulin says. Wildfires ravage Southern France as the next heat wave looms.
In currency markets. Against the U.S. dollar, major currencies are extending their gains as softer U.S. jobs data and recent Federal Reserve comments have eased expectations for an imminent rate hike. Improving risk sentiment following progress in U.S.-Iran peace talks and thinner trading conditions ahead of the U.S. Independence Day holiday are also weighing on the greenback, although markets remain alert to potential volatility amid low liquidity.
In commodity markets. Oil -0.12% | Nat Gas +1.50% | Gold +1.59% | Silver +3.31% | Copper +1.02% | Palladium +1.10% | Coffee -2.50% | Cocoa -1.47% | Soybeans +0.09%
CAD is holding on to its recent gains after rebounding from 14-month lows, supported by a softer U.S. dollar and continued expansion in Canada's manufacturing sector. However, the loonie remains vulnerable as uncertainty over the future of the USMCA and softer oil prices continue to cloud the medium-term outlook for the Canadian currency.
EURCAD extends its gains in early trading as the euro continues to outperform a Canadian dollar weighed down by weaker oil prices and ongoing uncertainty surrounding the future of the USMCA trade agreement. The near-term bias remains for EUR/CAD to stay supported while commodity prices remain subdued and trade-related uncertainty continues to weigh on the loonie.
EUR holds firm around 1.1450 in early trading as the U.S. dollar remains under pressure following weaker-than-expected U.S. jobs data, reducing expectations for an imminent Federal Reserve rate hike. While the softer greenback is supporting the euro in the near term, easing expectations for further ECB tightening are expected to limit any sustained upside.
GBP/EUR holds steady in early trading as softer Eurozone inflation and increasingly cautious ECB rhetoric continue to weigh on the single currency. With markets scaling back expectations for further ECB rate hikes, the near-term bias remains supportive for sterling against the euro.
GBP holds firm around 1.3350 in early trading and is on track for its strongest weekly gain in 12 weeks as easing UK political uncertainty and softer U.S. labour market data weigh on the U.S. dollar. Sterling also remains supported by expectations that the Bank of England could still raise interest rates later this year, with markets encouraged by Andy Burnham's commitment to maintaining the UK's fiscal rules.
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